July 25 (Bloomberg) -- Commerzbank AG fell the most in more
than two weeks after German newspaper Frankfurter Allgemeine
Zeitung said the bank lent the bankrupt city of Detroit more
than $400 million.

Germany’s second-biggest lender decreased as much as 4.7
percent, the steepest intraday decline since July 5. The shares
fell 3 percent to 6.65 euros at 1:34 p.m. in Frankfurt, valuing
the company at 7.57 billion euros ($10 billion). Trading volume
was 39 percent of the daily average over the past three months.

Commerzbank, which got a 18.2 billion-euro state bailout in
2009 and carried out its fifth capital increase in four years in
May, is seeking to reverse two straight quarters of losses that
prompted a downgrade by Standard & Poor’s. Detroit, saddled with
$18 billion in debt, filed the biggest U.S. municipal bankruptcy
in history last week after six decades of economic decline.
Bankruptcy protection was affirmed by the federal court today.

“For more than five years Commerzbank has been a
restructuring case and almost every quarter, there has been a
writedown which put a strain on earnings,” Dieter Hein, an
analyst at Fairesearch GmbH in Kronberg, Germany, said in a
telephone interview.

Commerzbank’s subsidiary Eurohypo, which the bank bought in
2005, lent more than $400 million to Detroit and might already
have written down claims, Frankfurter Allgemeine Zeitung
reported. Belgium’s Dexia SA said last week its exposure to
Detroit amounts to $305 million.

Commerzbank wrote down the value of the credit to Detroit,
Armin Guhl, a spokesman for the Frankfurt-based bank, said in a
telephone interview today. Guhl declined to provide details
about the composition of the lending or the timing and size of
the writedowns.

The bank agreed to write down its Greek government bond
holdings in 2011 and said last month it is ready to take losses
when selling soured real estate and shipping assets to raise
capital.